Question #88
Reading: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples
PDF File: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples.pdf
Page: 31
Status: Unattempted
Question
A common price to earnings (P/E) based method for estimating terminal value in multi-stage models is the:
Answer Choices:
A. fundamentals approach
B. dividend yield approach
C. P/E to growth (PEG) approach
Explanation
It is common to restate the Gordon growth model price as a multiple of expected future
book value per share or earnings per share (EPS).